Weintraub Electronics wants to expand to a new market segment with their ActiveWear wireless earphones. The...
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Weintraub Electronics wants to expand to a new market segment with their ActiveWear wireless earphones. The cost of the R5 million they raised in RE and Shares capital is respectively 13% and 10% per year. Their (RE:shares) ratio for this project is 1.5 while the debt-equity ratio for this project is 0.4, (which can also be interpreted as debt:equity of 3:1). Half of their debt financing is from a loan at an interest rate of 11% per year while the rest is from a bond at a rate of 14% per year.. Note: Preliminary workings before completing [a. b. & c.] [12 marks] a. What is the WACCEquity for this project? [6 marks] b. What is the WACCDebe for this project? [6 marks] c. What is the WACCTotal for this project? [6 marks] Weintraub Electronics wants to expand to a new market segment with their ActiveWear wireless earphones. The cost of the R5 million they raised in RE and Shares capital is respectively 13% and 10% per year. Their (RE:shares) ratio for this project is 1.5 while the debt-equity ratio for this project is 0.4, (which can also be interpreted as debt:equity of 3:1). Half of their debt financing is from a loan at an interest rate of 11% per year while the rest is from a bond at a rate of 14% per year.. Note: Preliminary workings before completing [a. b. & c.] [12 marks] a. What is the WACCEquity for this project? [6 marks] b. What is the WACCDebe for this project? [6 marks] c. What is the WACCTotal for this project? [6 marks]
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To calculate the Weighted Average Cost of Capital WACC for the project we need to consider the diffe... View the full answer
Related Book For
Essentials of Marketing
ISBN: 978-0078028885
13th edition
Authors: William D. Perreault, Joseph P. Cannon
Posted Date:
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